The Bill amends the Radiocommunications Act 1992 to
introduce increased competition in radiocommunications and to
enhance relevant management and sale of the radiocommunications
spectrum (the range of frequencies within which radiocommunications
are capable of being made).

This Bill is part of the major package of telecommunications
legislation which has been introduced into Parliament to allow for
the post-1997 telecommunications regime in Australia. Essentially,
the Bills in the package will provide for the establishment of a
new competitive telecommunications regime beginning on 1 July 1997
in place of the current duopoly.

A more detailed background and overview of the package of Bills
is found in the Bills Digest to the key piece of
legislation in the package, the Telecommunications Bill 1996.

The Spectrum Management Agency (SMA) is a Commonwealth statutory
agency within the portfolio of Communications and Arts. It was
established by the Radiocommunications Act 1992 (the
Principal Act). The primary function of SMA is to manage and allow
access to the radiofrequency spectrum. Technically, the 'spectrum'
is the range of frequencies used in radiocommunications. In such a
vast continent as Australia, radio-based communications are
essential for industry, safety and

telecommunications, as well as providing important cultural and
recreational services. Australia depends upon effective and
efficient access to, and management of, the spectrum. Australia's
ready acceptance of the technology and the convenience of mobile
cellular telephones and digital cordless services is a clear
reminder of how relevant radiocommunications are to the everyday
life of most Australians.

At present, SMA has about 120,000 clients who hold some 202,000
licences which authorise access to the spectrum. (1) As part of the
proposed post-1997 changes in regulation of telecommunications in
Australia, SMA will merge with the telecommunications regulator,
AUSTEL, to form the proposed Australian Communications Authority
(ACA).

In the 1995-96 financial year, SMA had total actual
appropriations of $36,931,000 and total actual revenue of
$107,754,000. SMA has a staffing level of around 380. (2)

Australia is moving rapidly to allow greater competition in
telecommunications-based industries. Part of this process is to
allow purchase of the right to utilise radiofrequencies within the
spectrum, even while the frequency is being progressively vacated
by a current user. This Bill will allow encumbered parts of the
spectrum to be sold in advance to enable investors the opportunity
of reducing the time taken to equip, establish and utilise the
radiofrequency. Existing users will also be able to enter into
commercial arrangements with new owners of that part of the
spectrum for continued use, subject to technical compatibility of
transmitters and related equipment.

Sale of the spectrum will be by public auction. Licensed use of
that part of the spectrum will be available for up to 15 years. The
initial allocation and licensing issue process will expressly fall
within section 50 of the Trade Practices Act 1974. That
section prohibits acquisitions that would result in a substantial
lessening of competition. In addition, the Bill will allow the
Minister to set pro-competitive limits to provide some entry for
new entrants.

The SMA also has an important role in setting technical
standards for radio-related devices capable of emitting electrical
interference which affects radiocommunications. These standards are
known as the electromagnetic compatibility (EMC) standards. The
Bill will expand SMA's coverage beyond radiocommunications devices
to non-radiocommunications devices, such as computers, navigation
equipment and certain specialised industrial equipment, capable of
causing interference to radiocommunications. In addition, health
and safety provisions will also enable SMA to include relevant
standards to protect the health and safety of persons operating,
working on or using radiocommunications services.

Reader's Note: The proposed
amendments are included in Schedule 1 to the Bill. The terminology
to be used therefore is 'Item' in the Schedule in lieu of 'Clause'
in the Bill. </ ul>

Items 1 to 8 in Schedule 1 simply deal with
additions and modifications to definitions in the Principal
Act.

Item 11 contains proposed additions to section
36 of the Principal Act. Section 36 falls within Part 2.2 -
Conversion Plans and Marketing Plans of the Principal Act. A
Marketing Plan is issued by SMA and it sets out precise
descriptions of the spectrum lots that can be combined to form
spectrum licences. The Conversion Plan sets out the
procedures to be followed by SMA in converting particular apparatus
licences in the designated bands to spectrum licences. Spectrum
licensing is the new, more flexible form of radiocommunications
that confers a form of property right over the spectrum. Licensees
have the flexibility to change their equipment or other aspect of
their spectrum use, subject to compliance with licence conditions.
Licensees may trade licences and aggregate or sub-divide licences
to form bigger or smaller blocks of spectrum space. (3)Pursuant to
section 36, the Minister may issue a notice to SMA designating a
specified part of the spectrum to be allocated for the purpose of
issuing spectrum licences. This designation process, however, must
now recognise that under a new Part 3.6 Re-allocation of
encumbered spectrum (proposed new sections 153A to 153Q) - see
Item 46 - parts of the spectrum may be
re-allocated by declaration even though they are currently occupied
by holders of an apparatus licence. The re-allocation is made in
advance to enable the new owners of that part of the spectrum to
prepare for operating their radiocommunications systems.

The proposed new subsections 36(6), 36(7) and 36(8) preclude the
Minister from issuing a section 36 designation while a proposed new
Part 3.6 re-allocation declaration is in force. The proposed new
subsections are aimed at preventing overlap in the utilisation of
the spectrum.

Item 14 adds a proposed new section 39A which
addresses the consequence of the new form of declaration of a
re-allocation of parts of the spectrum. The existing section 36
designation process brings with it a requirement for a
Marketing Plan (see existing section 39). Since the new
Part 3.6 is proposed to be added by the Bill (see Item 46), this
will preclude the requirements specified in existing section 36,
including the preparation of the Marketing Plan.
Consequently, a proposed new section 39A is added to require the
SMA to prepare an equivalent Marketing Plan in association
with the new re-allocation of encumbered spectrum.

Item 21 is a key provision in that it allows
the Minister to direct the SMA to impose limits on what may be
allocated to persons seeking licences to use the spectrum. The
purpose of the limits is to promote competition or to avoid adverse
effects on competition. The proposed addition subsections to
existing section 60 in the Principal Act will allow the SMA to
provide information to the Australian Competition and Consumer
Commission to ensure compliance with section 50 of the Trade
Practices Act 1974 (prohibitions on acquisitions that would
result in a substantial lessening of competition).

Digest Comment: Directions
by the Minister to SMA in relation to the exercise of power to
determine procedures imposing limits must be published in the
Gazette. Under the separate Legislative Instruments Bill 1996 (now
before the Senate) such a direction would probably be deemed to be
a disallowable instrument. If, hypothetically, the Legislative
Instruments Bill 1996 was not passed into law, then a Ministerial
direction under the proposed amendments in this Radiocommunications
Amendment Bill 1996 would not constitute a disallowable instrument.
</ ul>

Item 22 is a practical mechanism to enable the
SMA to defer the issue of the actual licence to a new licensee
pending the clearance of that part of the spectrum by an existing
user. This mechanism allows the new licensee (who is given an
allocation on the spectrum) to take full benefit of the
time period attaching to licences rather than have the licence
issued immediately and then mark time while the frequency is being
cleared (i.e. the new licence is issued when the new licensee is
actually ready to start transmitting on the radiofrequency).

Item 23 is a small but important provision. It
extends the duration of spectrum licenses from 10 years to
15 years. The extension in time is said to be to allow
investors a more attractive investment in terms of utilising the
frequency. In turn, it is assumed that the extension in time will
also be reflected in higher revenue to the Government when it
auctions allocations on the spectrum.

Item 25 inserts a new section 68A -
Authorisation under spectrum licence is to be treated as
acquisition of asset, in the Principal Act. This is a deeming
provision which deems a spectrum licence to be the acquisition of
an asset. This simply removes any doubt that such licences are
assets for the purpose of the restrictive trade practices
provisions of the Trade Practices Act 1974. Consequently,
acquisitions that would substantially lessen competition,
divestiture orders, and authorisations by the ACCC (where what
would otherwise be an anti-competitive acquisition has a positive
public benefit which outweighs the detrimental effect of any
lessening of competition) apply to spectrum licences.

These provisions should also be read in conjunction with
Item 28 which inserts a new Subdivision D -
Rules about section 50 and related provisions of the Trade
Practices Act, into Division 1 of the Principal Act, which
will also include a proposed new section 71A.

Item 35 is similar in effect to Item
21 and it empowers the Minister to issue written
directions to SMA about limits on the allocation and issue of an
apparatus licence (see section 106 of the Principal Act),
as distinct from a spectrum licence. Again, the purpose for setting
limits is for competition policy reasons.

Digest Comment : Same
comment as made under Item 21, above. </ ul>

Item 42. Section 114 of the Principal Act allows the licensee of
an apparatus licence to authorise a third party to operate
radiocommunications devices under the licence. Item 42 adds a
proposed new section 114A which removes any doubt that the
Trade Practices Act 1974 will apply to the authorisation
of a third party, as if that party had acquired an asset from the
apparatus licensee.

Item 46 is a key provision in the Bill. It adds
a proposed new Part 3.6 - Re-allocation of Encumbered
Spectrum. The operation of the proposed new part has been
outlined in the comments on Item 11, above. This
is the heart of the Bill and it allows the re-allocation of parts
of the spectrum while those parts may still be occupied by the
holder of an existing licence. Essentially, it allows the use of
lead time to enable a purchaser of that allocated part of the
spectrum to equip, establish and be ready to operate (or in
circumstances allow joint operation), pending the issue of the
actual new spectrum licence. Item 46 adds proposed
new sections 153A to 153Q to the Principal Act.

Digest Comment: Spectrum
re-allocation declarations made by the Minister are a disallowable
instrument (see proposed new subsection 153D(3) contained in
Item 46 the Bill

This re-allocation of the encumbered spectrum will also impact
on the 900 MHz [megahertz] Band Plan which is contained in
Statutory Rules 1992 No. 47. The 820 - 960 Mhz band in the spectrum
currently supports a variety of radiocommunications services,
including analogue AMPS mobile phone services ('AMPS' means
'Advanced Mobile Phone System'). The 900 MHz Band Plan is already
operating and its aim includes the progressive transition of AMPS
mobile phone systems to digital cellular telephone services which
use GSM technology ('GSM' means ' Global System for Mobile
Communications'). The principal date for the completion of the
transition from analogue to digital cellar telephones is 1 January
2000. The Explanatory Memorandum to the Bill (at page 20) indicates
that the Statutory Rule may be amended to make the cessation dates
for analogue phones earlier than that currently specified in Table
4 of the 900 MHz Band Plan. </ ul>

Item 47 is a commendable addition to the
Principal Act. It inserts a proposed new paragraph (f) into section
155. This proposed new paragraph adds a further criterion to the
standards and other technical regulation by SMA, to include
protecting the health and safety of persons who operate, maintain
or use radiocommunications equipment.

Item 50 recognises the constitutional limits of
Commonwealth power in making laws with respect to, primarily,
section 51(v) of the Constitution (i.e. the power to make
laws with respect to 'Postal, telegraphic, telephonic, and other
like services'). Certain industrial equipment, computers and
navigation equipment can interfere with radiocommunications because
they may not be devices which are electromagnetically compatible
with radiocommunications (the EMC standard). Section 157 is an
existing offence provision and it imposes a penalty for
using a non-standard transmitter. The proposed amendment
broadens the class of 'transmitters', to include devices which fall
within the requirement for electromagnetic compatibility but
confines the offences to the limits of Commonwealth power (e.g.
trade and commerce, broadcasting services, defence, supply of goods
to the Commonwealth, navigational light beacons, corporations,
banking and insurance). Items 52 and
53 achieve the same purpose in relation to
possession of a non-standard device. Likewise,
Item 60 covers the supply of non-standard
devices. The broader description 'devices' is now used in lieu of
'transmitter'.

Item 63 adds proposed paragraphs 162(e) and
162(f) to the Principal Act to enable the SMA to make standards
concerning electromagnetic compatibility (EMC standards) and health
and safety standards.

Item 65 exempts the SMA from public
consultation in making standards in cases of urgency where the
subject matter of the new standard is a health and safety
issue.

Items 80, 81 and 82 are a precautionary
constitutional measure and allow severance from the statute of the
proposed new provisions dealing with offences for sale of
non-standard devices which do not have the specified labels or
certificates of compliance (relating to electromagnetic
compatibility). Severance would be relevant if a court held that
the new offence provisions on EMCs (electromagnetic compatibility)
exceeded Commonwealth power. A clean severance would allow the
remainder (and residual effect) of the statute (applying to
transmitters and receivers) to continue to operate. (see
Explanatory Memorandum to the Bill - page 31).

Item 84 adds a new function to SMA (see section
233 of the Principal Act) to enable SMA to undertake activities
related to radiocommunications on a commercial basis, but not to
the detriment of its primary functions (see Item
85).

Digest Comment: Regard
should also be had to Item 89 which amends
existing section 293 of the Principal Act. When the SMA is levying
a charge for its primary activities that charge must be reasonable
and not amount to a tax. Basically, this means it has to be a
cost-recovery administrative charge and not a compulsory collection
of revenue for a public purpose. The exception to this is when SMA
engages in the new radiocommunications-related commercial activity.
In those circumstances, the SMA can charge a full commercial rate.
</ ul>

Items 92, 93 and
94 preserve the operation of any existing
determinations made under the Principal Act.

Brendan Bailey (06 2772434)
22 January 1997
Bills Digest Service
Parliamentary Research Service

This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.

PRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.

ISSN 1323-9031
Commonwealth of Australia 1997

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Published by the Department of the Parliamentary Library,
1996.

This page was prepared by the Parliamentary Research Service,
Commonwealth of Australia
Last updated: 20 January 1997.